MONTREAL, June 17, 2013 /CNW Telbec/ - Invoking "obvious economic
reasons," i.e., annual savings of $24 million, the Quebec government
cancelled six small hydroelectric power projects this past February. In
April, however, it announced new supply contracts for wind power, a
sector that is already guaranteed to receive an implicit subsidy of
$695 million a year until 2020. For Youri Chassin, economist at the MEI
and the author of the Economic Note released today, we have an urgent need for rational decisions based on
our actual energy requirements and not on artificial support of various
energy sectors.

"Quebecers pay literally hundreds of millions of dollars a year to
produce electricity from wind turbines that they don't need. This
energy is 2.5 times more expensive than hydroelectricity. Even if they
account for only a small proportion of the electricity produced here,
Hydro-Québec has indicated that the most recent rate hike was due
almost entirely to these new projects," explains Mr. Chassin.

In addition to the purchase price for electricity for each energy
sector, the author included other fees paid by Hydro-Québec related to
transportation, distribution and integration, as well as network
losses. Taking these parameters into account, he estimates that wind
power is the most expensive at 14.14₵ per kWh, compared to biomass
(13.40₵) and electricity from small hydroelectric power plants
(11.53₵). Patrimonial hydroelectricity costs just 5.55₵ per kWh.

Patrimonial energy
As a Crown corporation, Hydro-Québec is obliged to make a block of
"patrimonial" energy available to all Quebecers, so that they can enjoy
very low electricity rates. However, this historical benefit is in the
process of being eroded. Indeed, due to the new influx of electricity
produced at high prices, mostly from wind turbines, Quebecers are being
deprived of a portion of this patrimonial energy.

With Quebecers having to consume energy that is very expensive to
produce, Hydro-Québec is in a position to export more hydroelectricity,
a type of energy that is green, renewable and inexpensive, which
increasingly benefits Americans, concludes Mr. Chassin.

The Economic Note entitled The Growing Cost of Electricity Production in Quebec was prepared by Youri Chassin, economist at the MEI. This publication
is available at www.iedm.org.

The Montreal Economic Institute is an independent, non-partisan,
not-for-profit research and educational organization. Through its
publications and conferences, the MEI stimulates debate on public
policies in Quebec and across Canada by proposing wealth-creating
reforms based on market mechanisms.